NetEase.com, Inc. (NTES) recently spiked to a new all-time high on the heels of a solid 19% Q4 earnings surprise. With a bullish 13% growth projection and compelling valuation, this Zacks #1 rank stock has gamed its way into momentum.
Company Description
NetEase.com, Inc. is an Internet technology company that specializes in online gaming applications. The company was founded in 1997 and has a market cap of $6.98 billion.
With video and online games as popular as ever, NetEase has been experiencing robust growth on the back of surging demand. That dynamic showed up when the company reported strong Q4 results in late February that came in well ahead of expectations.
Fourth-Quarter Results
Revenue for the period was up 30% from last year to $255 million. Earnings also came in strong at 83 cents, 19% ahead of the Zacks Consensus Estimate.
The good quarter was led by the company’s online game revenues, which were up 31% from last year on the launch of Wrath of Lich King and an expansion pack for the very popular World of Warcraft that the company licenses from Activision Blizzard.
Online advertising revenue was also strong, up 27% in the fourth quarter and 65% for the full year. NetEase is also a beast in margins, scoring a fat 40% profit margin for 2010.
Financial Profile
The company also has a great financial profile, with cash and short-term investments up $412 million from last year to $1.458 billion and no debt.
Estimates
We saw a pretty solid jump in estimates off the good quarter, with the current year adding 23 cents to $3.22 and the next-year estimate gaining 35 cents to $3.65, a bullish 13% growth projection.
Valuation
But in spite of the gains, the valuation picture still looks compelling, with a forward P/E of 16.4X a sharp discount to the industry average of 26X.
6-Month Chart
On the chart, shares have been charging higher for the last month, recently hitting a new all-time high at $53.86 on the strong upward momentum. Look for support from the longer-term trend on any weakness, take a look below.
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
NETEASE.COM-ADR (NTES): Free Stock Analysis Report
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